A career in private equity is the most lucrative career in the finance world. Many finance graduates, investment bankers, management consultants, or finance graduates working in any finance institute pursue private equity jobs as their destination career. Given the compensation benefits and work profile, private equity attracts people from sectors other than finance too.
On the other end, private equity looks for the brightest and competitive minds around. The field is more competitive and hiring is less as compared to other industries. And, moving from management consultant firms to the private equity industry is an uphill climbing task. It is possible with consistent efforts, skills, demonstrated commitment, and target-based movement.
If you are one among the management consultants looking for a career in private equity, then this article is for you.
First of all, PE firms may not encourage management consultants. They look for killer financial modeling skills, valuation skills, and candidates willing to work for odd hours rather than one with strategic and operational experience. You have to prove yourself by showcasing the skills the PE firms look for.
Let us see the key differences, the carry-over lessons to PE firm from the management firm, and challenges you may have to face at PE firm.
Management Consultant to PE Professional: The key differences
In management consulting, you get involved in research and analysis of business problems and improve their efficiency and productivity. The resolution of the business problem ends the project and you get paid for the rendered quality services.
In the case of PE, the firms sponsor to improve the operational efficiencies throughout its hold period. PE firms use the money sourced from investors in purchasing the shares or acquiring the company. Private equity professionals gain money from the management fee and share in profits earned by equity funds.
If you have made up your mind to get into private equity, then there are a few takeaways from your existing job that might help at PE firm.
Time Management for all Areas of Life: Getting Things Done
Management Consultant to PE Professional: The carry-over lessons
As a consultant, your experience has taught you to think out of the box for business solutions. Many businesses may need these new strategies leading to successful deal closure. In addition, as you already know to analyze the market situation, competitors, and implement a structured approach during the course, a part of the PE job could be done efficiently.
However, you find certain challenges.
Management Consultant to PE Professional: The challenges of a PE firm
The top challenge you would face is getting your foot in the door. Many of your colleagues, search firm consultants, interviewers suggest you get into investment banking first or pursue an MBA from the top business school.
Above all this, if you could get a chance to meet the right interviewer, they may object if you do not have finance modeling skills and leading a deal. They test your interest to work for long hours.
After getting into a private equity firm, the business strategy during a buyout transaction should be an actual or realistic strategy. You need to work on the strategy and make things happen. Further, you need to develop finance technical skills, monitor investments, build business sense, manage accountants and consultants during deal execution.
With all these preparation in mind, you have to look for PE firms that hire people like you.
Management Consultant to PE professional: Where to look for
If you are a consultant working in bigger companies like McKinsey, Bain, or BCG, you have all the chance to break into any of the best private equity consulting firms.
If not, there are several consulting friendly private equity firms. To mention a few from middle-market PE funds, they are Charlesbank, Golden Gate, Altamont Capital, Bain Capital, Advent, Audax, Berkshire Partners, and New Mountain Capital. They have a history of consultant hiring.
Further, if you are a consultant from lower-tier firms, then you should gain lateral entry into middle bulge market consulting firms, and then try to get recruited in a PE firm. You may also pursue an MBA and try your chance or get recruited for smaller PE operational firms.
To summarize, it is a slow and steady process taking months to years. Your determination and dedication lead the way.
